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Quarterly Tanker Market Update: Q4-2013
Global oil demand is expected to average 92.5 million barrels per day (mb/d) in 2014, representing an increase of 4.1 mb/d, or 4.6 percent, compared to 2010 oil demand of 88.4 mb/d. In recent years, oil demand growth has been more than offset by high levels of fleet growth with the global tanker fleet growing by a net 70.8 million deadweight tonnes (mdwt), or 16.3 percent, from the start of 2010 until January 2014. Moderate oil demand growth, combined with high tanker fleet growth resulted in a significant decline in crude tanker spot rates and second-hand tanker values during the period from 2010 to the fourth quarter of 2013.
In December 2013 and January 2014, crude tanker spot rates increased significantly, reaching their highest levels since the third quarter of 2008, although rates for 2013 as a whole were comparatively low on a historical basis. This recent increase was primarily due to strong Chinese crude oil imports, an increase in long-haul movements from the Atlantic basin to Asia, and seasonal factors.
World tanker fleet
There are currently 61.6 mdwt of tankers on order, or approximately 12.3 percent of the existing fleet. The tanker orderbook has been shrinking since it peaked at 190 mdwt, or approximately 49 percent of the fleet, in September 2008. As a result of the smaller orderbook, the global tanker fleet is expected to grow by only 1.2 percent in 2014 and 1.3 percent in 2015, net of removals, which is the smallest fleet growth rate since 2001. The pace of new tanker ordering increased in 2013, with a total of 33.6 mdwt ordered, compared to just 13.9 mdwt ordered during 2012. From 2000 to 2012, annual orders averaged 35.8 mdwt. However, the majority of orders placed in 2013 were for Medium-Range (MR) and Long Range 2 (LR2) product tankers.
In its January 2014 "World Economic Outlook", the International Monetary Fund (IMF) raised its global GDP growth forecast for 2014 to 3.7 percent, an increase of 0.1 percent over its previous forecast for 2014. Global oil demand is projected to grow by 1.2 million mb/d in 2014 based on the average of the forecasts of the International Energy Agency, the Energy Information Administration, and OPEC, an increase from the 1.0 mb/d of oil demand growth in 2013. The forecasted increase in demand is based on the cautiously positive sentiment for global economic growth, which continues to be driven by China, although at a slower pace than previous years. The call on OPEC is expected to decline by around 0.6 mb/d in 2014, as non-OPEC supply, mostly driven by the United States, continues to grow.
A combination of improving global economic conditions and expected stronger oil demand growth coupled with limited tanker fleet growth for 2014 and 2015, is expected to drive an increase in tanker fleet utilization and therefore improved spot tanker rates over the next two years.
FORWARD LOOKING STATEMENTS
This video and content contains forward-looking statements which reflect the Company's current views with respect to certain future events and performance, including statements regarding: tanker market fundamentals, including the balance of supply and demand in the tanker market, and spot tanker charter rates. The following factors are among those that could cause actual results to differ materially from the forward-looking statements, which involve risks and uncertainties, and that should be considered in evaluating any such statement: changes in spot market tanker rates; changes in the production of or demand for oil; changes in trading patterns significantly affecting overall vessel tonnage requirements; greater or less than anticipated levels of tanker newbuilding orders or greater or less than expected level of tanker scrapping; changes in applicable industry laws and regulations and the timing of implementation of new laws and regulations; changes in the typical seasonal variations in tanker charter rates and other factors discussed in Teekay Tankers' filings from time to time with the United States Securities and Exchange Commission, including its Report on Form 20-F for the fiscal year ended December 31, 2013 and its Reports on Form 6-K for the quarterly periods ended December 31, 2013, September 30, 2013, June 30, 2013 and December 31, 2012. The Company expressly disclaims any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with respect thereto or any change in events, conditions or circumstances on which any such statement is based.